How workers have won the right to superannuation since the 1980s.

History

• 1980's 35% of workers had superannuation

• Mainly managers, executives and public sector

• Not generally available for blue collar workers, women and part time staff

• Most funds were defined benefit funds - only fully vested at 20 - 25 years

• When leaving employment employees got only contributions less charges

• This disadvantaged members who had short periods of service

• Some industry funds established in the 70's, more in mid 80's

National wage case 1986

• Based on negotiations between ACTU and Labor government as part of the Accord

• In 1986 the wage case provided for 3% of the wages claim to be paid into approved super funds

• This led to the creation of more industry funds

• By 1988 51% of workers had super

• 1991 - 71% of workers had super

Superannuation guarantee legislation

• Introduced from 1 July 1992

• Gradual increase of employer contributions to super to 9% by 2002/3

• 1993 - 80% of workers had super

• 1995 - 85% of workers had super

Industry funds - what made these different?

• Accumulation schemes not defined benefit

• Portability

• Low cost administration

• Fully vested - all funds plus interest are the members'

• Employee and employer representation in fund management

• Commitment to ensuring employer contributions are paid

• Cheaper TDP and disability insurance

• Superannuation members home loans

Performance

• Industry funds have mainly outperformed similar corporate or life office products

• Relates to lower fees, innovative investment strategies, changing the whole market' industry funds work together on innovative products - economies of scale

• Most major industry funds now have assets over $1 billion

• Industry funds invest a higher percentage in Development Capital in Australia - growing Australia

Choice of fund

• Requirement on employers is that they must offer a choice of super fund to employees

• The choice must include:
  · one Retirement Savings Account (RSA) - Bank product, capital guaranteed, low interest, no trustee structure
  · one Public Offer Fund
  · the relevant industry fund
  · an in house fund

• Employees have 28 days to choose

• Enterprise agreements can override this

Threats

• Government policy on competition and choice designed to reduce industry fund power base

• Bank RSA's will result in erosion of retirement income due to lower performance

(Adapted from ACTU)